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Peak XV and HongShan, Indian and Chinese investment firms separated from the Sequoia power plant last yearled a $10 million seed investment in KAST, a dollar-denominated neobank-like platform that allows customers to hold and spend stablecoins through traditional payment methods.
Closet also issues credit cards that work with standard merchant networks, allowing users to spend their stablecoins at merchants that do not support crypto transactions.
The startup is targeting emerging markets where access to US dollars is limited and remittance costs are high. KAST does not operate in India or China due to regulatory restrictions, but serves a large offshore workforce from these markets.
Co-founder Raagulan Pathy, who previously led Circle’s Asia Pacific operations, told TechCrunch that banking infrastructure in many countries is severely lacking in cross-border capabilities. The platform aims to reduce friction in making international payments by bypassing traditional banking networks.
The launch of KAST comes at a time when stablecoin adoption is seeing rapid growth. More than 20 million people around the world use stablecoins every month, and most of this is concentrated in emerging markets. Stripe’s The $1.1 billion acquisition of stablecoin infrastructure provider Bridge October showed a further increase in mainstream corporate interest in the technology.
The startup competes with both cryptocurrency firms and traditional fintech companies expanding into stablecoins. There is PayPal launched its own token pegged to the dollarRevolut and Ripple announced plans to issue stablecoins. The sector is also heavily concentrated, with Tether controlling roughly three-quarters of the supply.
Daniel Bertoli, another co-founder of KAST and a former partner at Quona Capital, claims that existing neobanks struggle with blockchain integration because their core systems are not designed for cryptocurrency. “The next generation of digital banks will be inherently global and built from the ground up on stablecoins,” he said.
Partners from DST Global and Goodwater Capital also invested in the round. KAST declined to disclose user numbers or its valuation, but said its growth exceeded forecasts in its first four months of operation.
The startup plans to launch savings products and expand money transfer services with a focus on stablecoin-based infrastructure.
Alex Svanevik, co-founder and CEO of analytics platform Nansen.ai and an early backer of KAST, said that because KAST only works with stablecoins, it offers its clients “a safe haven for hard-earned income when local currencies fall.” .
“As more digital nomads get paid in stablecoins, they can now bypass the hassle of legacy rails. International transfers that once took weeks can now be done instantly and at virtually no cost,” he said in a statement.
For Peak XV and HongShan, this is their first joint venture since Sequoia split in June 2023. Firms are increasingly operating beyond their traditional geographies – HongShan has expanded into Europe and North Asia as it seeks to deploy its $9 billion reserve fund. The capital Peak XV established its presence in the United States
Their former parent is in the advanced stages of consulting for Sequoia back to fintech VanceTechCrunch reported late last month. If the deal goes through, it will be the firm’s first investment in India since separation.
